One important
e-commerce solution to increase orders is by
accepting credit card payments on-line. The
reason is that on-line buyers are usually
impulse buyers and accepting credit card
payment on-line provides a convenient means
for them to buy and pay.

With more than
65% of the population carrying at least one
major credit card, credit card acceptance
creates impulse and cash restrictive
purchases, along with ease of use for
Internet businesses.

There are four
basic links in any credit card E-commerce
transaction: The Web site 'shopping cart';
the Web host or server; the 'Payment
Gateway' (or credit card processing agent)
and the Merchant Account (the financial
institution that credits the E-commerce
vendor). There are many ways that these
links can be joined and these services and
products can be purchased as packages or
individually. In order to achieve what is
called 'real-time' credit card processing,
each link must be able to successfully
transmit information down the chain to the
next, almost instantly.

Like most
retailers, an E-merchant has a display
window for their products. In E-commerce
this is known as the 'Shopping Cart'. It is
the first link in completing an E-commerce
transaction, yet the last link in the
merchandising chain.

The Shopping
Cart is split into two parts, the
'storefront' and the 'cash register'. A good
shopping cart amongst other things, allows
customers to select several items from the
storefront and purchase them as a group when
they reach the cash register.

The cash
register will present the purchaser with an
order form that will collect all of the
relevant credit card information for
processing. This information is then
transmitted through what is known as a
Secured Socket Layer (SSL), a sophisticated
encryption system, to the credit card
processing agent ('Payment Gateway' in
E-commerce terms).

When your
customer has entered their purchase order
the relevant information travels the link
between your site and the Payment Gateway.

It goes
directly from their computer to the server
on which your site is hosted or to a server
maintained by the Payment Gateway. If it
goes to your server the Web host re-routes
the payment information to the Payment
Gateway. These transmissions of confidential
information must be secure. Securing
consumer confidence is one of the foremost
struggles of E-commerce merchants today.

The Payment
Gateway, or credit card processing agent, is
the agency responsible for verifying credit
card information and affirming that there
are sufficient funds to cover a purchase.

The better
known ‘Link’ companies are VeriSign,
Authorize.Net and Online Data Corp. These
companies pass the information to their
Merchant Bank that in turn contacts the
credit card issuer, which approves or denies
credit. Notice of approval or denial is then
forwarded back down the chain to the Payment
Gateway and to the E-merchant.

Over the last
few years, Internet experts have been
working hard to create standards and systems
to protect consumers from fraud. With the
invention of SSL and Security Certificates
the Web has become a much safer place to
shop.

The last link in the chain is your Merchant
Account. This is an account held for you by
the Merchant Bank that credits you for your
approved E-commerce transactions.

Canadian
businesses often find getting a merchant
account from their bank for an Internet
business is next to impossible. Many
American companies such as Online Data Corp.
are now jumping into our Canadian market,
and providing this service quite readily to
Canadian companies.

However it is
done, the keyword is integration. Remember
that a shopping cart is only part of the
equation; it is the final check out section
of all your merchandising efforts.

By making the
decision to accept credit cards, your
company's profit and growth can be realized
much sooner.
-
John Shenton - April 30, 2002

N.B.** The articles were first published in the Times
(Montreal, Canada) and written by
John Shenton as special contributor to the Times Technology Section.
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